B-106595, NOV 28, 1951

B-106595, NOV 28, 1951

PRECIS-UNAVAILABLE

THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO LETTER OF NOVEMBER 9, 1951, AND ENCLOSURES, FROM THE ACTING DIRECTOR OF FINANCE, DEPARTMENT OF THE AIR FORCE, REQUESTING A DECISION AS TO WHETHER, UNDER THE FACTS REPORTED, CONTRACT NO. AF 33(038)27929, WITH THE EARLE HART WOODWORKING MACHINE COMPANY MAY BE CANCELLED AND THE CONTRACTOR BE REIMBURSED THE SUM OF $1,030.31, REPRESENTING EXPENSES INCURRED IN CONNECTION WITH THE ANTICIPATED PERFORMANCE THEREOF, AND A NEW CONTRACT BE AWARDED TO L. POWER AND COMPANY.

IT IS STATED IN LETTER OF OCTOBER 10, 1951, FROM THE DIRECTOR, PROCUREMENT AND INDUSTRIAL PLANNING, WRIGHT-PATTERSON AIR FORCE BASE, DAYTON, OHIO, THAT IN RESPONSE TO INVITATION TO BID NO. 33-038-1604, DATED APRIL 2, 1951, EIGHT BIDS WERE RECEIVED WITH RESPECT TO ITEM NO. 7, CALLING FOR 50 ELECTRICAL BAND SAWS. UNDER DATE OF JUNE 27, 1951, A CONTRACT FOR THE SPECIFIED EQUIPMENT WAS EXECUTED WITH THE EARLE HART WOODWORKING MACHINE COMPANY FOR $78,216. THEREAFTER, IT WAS DETERMINED BY THE ADMINISTRATIVE OFFICE THAT THE REFERRED-TO CONTRACT INADVERTENTLY HAD BEEN AWARDED IN ERROR SINCE THE LOWEST RESPONSIVE BIDDER WAS L. POWER AND COMPANY WHOSE BID OF $75,350 WAS $2,866 LESS THAN THE ACCEPTED OFFER. UNDER DATE OF JULY 26, 1951, THE EARLE HART WOODWORKING MACHINE COMPANY WAS ADVISED TO DISCONTINUE WORK UNDER ITS CONTRACT.

IT HAS BEEN HELD BY THE COURTS THAT WHEN THE PUBLIC INTEREST REQUIRES SUCH ACTION, A CONTRACTING OFFICER MAY TERMINATE A CONTRACT WHICH HE WAS AUTHORIZED TO MAKE AND THAT HE MAY, BY SUPPLEMENTAL CONTRACT, AGREE WITH A CONTRACTOR UPON THE COMPENSATION TO BE PAID FOR WORK ALREADY PERFORMED, PROVIDED THE AMOUNT AGREED UPON IS PROPER AND JUST AND THE CONTRACTOR WILL ACCEPT SUCH AMOUNT IN FULL AND FINAL SETTLEMENT OF ALL RIGHTS INCIDENT TO OR ARISING OUT OF THE ORIGINAL AND SUPPLEMENTAL CONTRACTS. UNITED STATES V. CORLISS STEAM ENGINE CO., 91 U.S. 321; 18 COMP. GEN. 826. UNDER THE CIRCUMSTANCES REPORTED IN THIS CASE IT IS APPARENT THAT IT WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT TO TERMINATE THE CONTRACT AWARDED IN ERROR AND TO ENTER INTO A CONTRACT WITH L. POWER AND COMPANY SINCE THE UNITED STATES WOULD BENEFIT TO THE EXTENT OF THE DIFFERENCE BETWEEN THE TWO CONTRACT PRICES, LESS THE EXPENSES INCURRED BY THE FORMER CONTRACTOR, OR $1,835.69.

YOU ARE ADVISED, THEREFORE, THAT THIS OFFICE WILL INTERPOSE NO OBJECTION TO THE REIMBURSEMENT OF $1,030.31 TO THE EARLE HART WOODWORKING MACHINE COMPANY FOR THE EXPENSES INCURRED UNDER ITS CONTRACT IF SUCH AMOUNT BE ACCEPTED BY THE CONTRACTOR IN FULL AND FINAL SETTLEMENT OF ALL RIGHTS INCIDENT TO ITS ORIGINAL CONTRACT AND A RELEASE TO THAT EFFECT BE OBTAINED. AND OF COURSE, THERE IS NO QUESTION AS TO THE AUTHORITY OF THE CONTRACTING OFFICER TO ENTER INTO A CONTRACT WITH L. POWER AND COMPANY WHOSE BID WAS THE LOWEST ONE RECEIVED. SINCE THE RECORD SHOWS THAT THE COMPANY HAS GIVEN NOTICE OF ITS WILLINGNESS TO ACCEPT AT THIS TIME A CONTRACT AT THE PRICE ORIGINALLY QUOTED FOR THE DESIRED EQUIPMENT, SUCH OFFER SHOULD BE ACCEPTED IN VIEW OF THE OBVIOUS SAVINGS TO BE ACCOMPLISHED THEREBY.

AS REQUESTED IN THE LETTER OF OCTOBER 10, 1951, THE ENCLOSURES TRANSMITTED WITH THE COVERING LETTER DATED NOVEMBER 9, 1951, ARE RETURNED HEREWITH.